take a look at the reversals on salesforce.com. fresh 52-week high turned to the negative, down by 0.2%. we'll be investigating this stock for sure. what is coming up on "fast money"? >> back in action, we have the analyst who says now the chance of a u.s. debt downgrade is higher, he's at guggenheim and the top shorts from 2013, the only short etf fund and the ceo of liquidity services that handles returns. >> thank you for watching "squawk on the street." that does it for our show. "fast money halftime report" is up next.

>> all right, guys, thank you very much. welcome to "the halftime show" four hours to go until the close and here is where we stand on the first trading day of 2013, plus 218 for the dow, the s&p higher sharply as well, nasdaq up better than 2%, the big winner. the man who whipped the market, lee cooperman is here live, his omega advisers returned 32% in 2012. now the hedge fund legend gives his best plays for the year ahead. debate it, hp was the worst performer of 2012. what's in store for the company in 2013? first our top story is the rally, stocks off to their best first day gain in five years after congress votes to approve the fiscal cliff deal. our traders are john najarian, stephen weiss, joer er iterran. how are you playing? >> continuing to play and own financials and focusing on

specifically the capital market plays, the goldman sachs, the morgan stanley. right now the leading indicator where this market is going to go not in the near term but longer term will be where the ten-year treasury trades and the financials themselves, that sector will be the largest beneficiary of a continued move in the yield higher. >> simon baker, the vix is at its lowest level since november. what are you doing now that we have a deal on the fiscal cliff, maybe not a best deal of all but a deal nonetheless. >> it's game on. debris with joe. the cyclicals, he talked about the technology names, the industrials, you've got to be involved, cs industries if you're not involved in the appled, the googles, the ebays, get in. >> i have a lot of buyers, weiss, are you with them? >> i am. i don't think we'll see as much volatility from the debt ceiling debates despite what obama said. not because there's not going to be controversy but the markets going to say we got the fiscal

cliff despite the rancor. i added a little spike to walter and also added a little to the bonds short and i think that's the play this year. >> we have the virtual dr. j. with us as well. last week for the first time in more than 30 years you had no positions in the market. for those who said we were going to sell on this news, they were wrong at least for today. have you changed your position in the market? >> i don't know if they were wrong on this news. in other words i think we all said, judge, if we get the deal we're going to see a rally of about 50 handles in the s&p. take a look at the move we've seen, 50 handles exactly. i mean, we just broke through 1400 last friday or monday this past week, right? where did we get to today? i mean, it's a 50 handle move. should it have been sold in time will tell. i do think that the fact that the consumer is not going to be hit with these clinton-era tax

increases, i think that is a positive thing. so in other words when i was saying i was in cash last week, which was 100% accurate, i was saying that because i thought the likelihood of either a melt-up like we've just seen or if we didn't get it a whoosh to the downside was pretty dramatic. you take a look at where we are virtually from december 20th, when i said that, we're six points higher, six s&p points higher. we were 1443, today we're right now at 1449. that's six points, judge. that's not much, so in other words i don't think you missed out on anything being in cash, and i think you missed out on a lot of pain and pulling your hair out and getting a harl like th hairline like this if you were watching it go down last week. >> a man who beat the market in 2012, leon cooperman, welcome, happy new year. >> happy new year to you and everyone else on the show. >> i appreciate it very much. well they got a deal. they may not have made us very

proud in the process but the market seems to like it at least for today. >> i don't think it's a surprise. the only surprise is how aggravating it is to get there, and how they destabilized the public unnecessarily, but be that as it may, that's the politics. we seem to have leadership out of crisis and no crisis, no leadership. >> what does it mean then for 2013 in the markets? the deal is in the books. we're going to have a big fight about the debt ceiling coming up, you know that. put it all into context about what people should be thinking about the stock market now as we head into 2013? >> i would say generally on the plus side of the market, i would say number one, you know, bear market generally proceed recession and if you don't have recession it's hard to see a bear market. that's my first observation is we at the macro level are relatively optimistic. i should say you mentioned the good year we had. we had a good year because it was a team effort, and various

members of the team had the very correct view so our macro work headed by steve einhorn had a bullish view of the market, credit work was very bullish and structured credit that added important retail returns and the ek withity team had good stock picks for the year. i would say getting to the outlook for 2013, my first common, bear markets precede recessions. we don't have a recessionary outlook, 1.5, 2% type of gdp growth. secondly, i've been saying this for two and a half years the fed has created an environment where there is nothing in the world for financial assets that's competitive to equities. you have cash, which is zero, you have u.s. government bonds which i don't want it to sound outlandish a joke at 8%, you keep 60% of the 1- and make a little over 1% and my guess is inflation is 2 to 3.

bonds don't belong there. the government runs the deficit and the fed buys the deficit. high yield which is an important area for us over the last few years has gone from a 25% yield in '08 to 6.3, 6.4 presently and no great bargains there, one-off but no asset class as a generalization so you're left with equities and equities are in a zone of fair evaluation to modest evaluation. i'll give you a little set of statistics. where is the bubble? in the year 2000, cisco was 100 times earnings, didn't pay a dividend and ten-year u.s. governments were 6.5%. today cisco is struggling to sell around ten times earnings, yields not far from 3%, which is not quite twice the 1.7%, 1.8% ten-year bond. the bubble isn't in equities. i think the bubble is in bonds.

>> why only 340destly optimistic for stocks for 2013? i know you're spreading the wealth figuratively and literally to your team. you have the u.s. economy seemingly improving, house something getting better, china seems to be improving as well, you've got europe not as bad as certainly it was, and the ecb, central banks all around the world are greasing the markets with more liquidity than ever before. >> you have my positive list. it's funny, you don't have my notes but basically my comment about the economy, my comment about the fed, the global economy is doing slightly better, the chinese economy is picking up, home prices are improving, home sales are picking up, that's important to consumer psychology, the banking system is highly liquid, gasoline prices from $3.85 to $3.30 and investors derisked. they've been spending the last four or five years buying bonds and selling stocks, they might spend some part of the next few years replacing the stocks they have sold. debris with that.

first of all i didn't give you a number. last year i think the total return on the s&p was around 16%. >> right. >> about 13 plus and half a percent in price and the rest in dividends. we're looking for 10% incline a year and that would make one constructive. one of my issues, number one, i have to say we are not, you know, following policies that are sustainable. trillion-dollar deficits and zero interest rates which are destroying savers is not a policy for long-term success, and so we have to exit from these policies and exiting from the policies is not going to be easy, number one. number two, profit margins probably are in a zone of peaking and there's as much chance of earnings being disappointing in certain sectors of the economy than being pleasing. i think the earnings momentum is not what it was and we had this washington disarray and the debt ceiling negotiations coming up, that's going to be painful.

i read some expletives mr. boehner directed towards harry reid so there's clearly some enmity there, so there are a lot of things to worry about but the overall market should do better and i'm most focused in on the fact, what do you do with money? i have to take money and invest it 37. >> you have to put it somewhere. >> my line is on bonds, which is where the bubble's been putting money, i think buying buying u.s. bonds is walking into a steamroller to pick up a dime. >> where are the winning strategies? >> i'll give you two answers. one i'll give a slight plug you guys had on the program a while ago an organization called portfolios with purpose, is a contest they created where you pay a fee to enter, and you have the right to name a favorite charity to receive the winnings if you win. so you had to pick five stocks and so i'll give you four of the five i picked, because one is

we're in the process of buying it and my fidelity is to my investments first so croc, chymera, quality corp., tetragon, financial services company and the last one is a mystery stock, when it double this is year, then we'll give you the name, but you have to forgive me, i'm not being coy. the other answer is every christmastime i take out my team, which for the holiday dinner and one of the prerequisites is to go around the room and ask everybody to pick to click the following year so just to give you some semblance of the ideas, our technology partner likes call com, google and verifone, we all three. the guy with the hottest hand in 2012, we made a lot of money for sprint, think sprint will be a winner in 2013, we are there.

we're not declaring how we're voting but we own a lot of sand ridge and we're listening to both sides carefully. we like some of the energy companies, haliburton, atlas energy and express scripps and motorola solutions and aig, we have a lot of company but we think it's cheap relative to book value and so we're looking at a low multiple on normalized earnings. we have a few of the banks, citi corps, jpmorgan, wells fargo, tetragon and crocs and consumer. there's no shortage of chief stocks. one that's declined recently because the market didn't like a deal we happened to like but we bought a lot of freeport copper and gold on the recent break when they announced the 2a acquisition of two energy companies we have a high regard for mr. moffitt, he's an

objective clear-headed guy and we're expressing that through a large position mmr, which that game is largely over but we rotated into freeport copper and gold. no shortage of attractive ideas but there are issues out there. as a citizen, i'm most concerned about the unsustainable ma abla of the policies we're following. the proverbial stuff will hit the wall one of these days or the fan. you don't know there it's 2013, 2014 or 2015, and in my business if you're too early you don't have a business and if you're too late, you don't have a business. as an element of timing, for the moment, given all the things you mentioned, the economy doing better, the chinese economy picking up home prices, et cetera, that i think the market should produce a respectable return in 2013. don't disregard volatility. hopefully the circus around the debt ceiling won't be as bad as the fiscal cliff. >> let's hope.

i think our viewers will be thrilled of the number of names that you went through right there, and on the other side of the break, mr. cooperman i'd ask to you stick with us, i want to talk to you more about technology, apple specifically. obviously had a turbulent end to 2012, so we'll go there and talk about a few other things. in the meantime we'll take a quick break. on the way one of our traders reveals his first trades of the year and we head to the floor of the nyse for the street's view of the cliff deal in washington, and later hp shares up today after struggling mightily in 20 is 12. we'll debate whether a better year is ahead and of course a return to the conversation with leon cooperman, when we come back. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else.

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the welcome back to "the halftime report." we welcome back in leon cooperman, chairman of omega advisers. i thought interesting during the break when we were speaking you said you were surprised at the rally somewhat that we're seeing today. >> not the rally itself but the order of magnitude. i had thought that on friday the market had done a large part of the adjustment to the high likelihood that the fiscal cliff would be dealt with, so to be up 2% is a pleasant surprise. i'll take it, but i think it revolves around the fact that people are underinvested. one of the factors in that plus list you and i reviewed is that officers have derisked with the scare and the damage from the 2008 experience is very

scarring, and so in '09, '10, '11, '12, even though the market was moving up the public was selling their stocks and buying bonds and frankly that was done by institutions which really surprised me. i've had some withdrawals in the last year from pension plans that were taking the money out. i ask them what they're doing with the money, buying fixed income which i think is crazy relative to equities. the market always does what it has to do to embarrass the largest group of investors and my guess is the pain trade has been up over the last year and will continue for a while to be up until people get totally committed and they won't have to worry about the other side of the equation. >> do you think we'll see the return of the individual investor en masse in 2013 or are those scars too deep? >> i wouldn't expect it in 2013. i tell a story, people are probably sick of hearing the story but of my own personal odyssey. i got my mba from columbia business school january 31st of

1967. i had a 6-month-old child at the time, now a 47-year-old hedge fund manager with a great record. i had a national defense student loan, no money in the bank, by definition i had a negative net worth so i couldn't afford the obligatory vacation. back then they went to hawaii, now they go to australia. i had to go to work immediately and the next day i started my close to 25-year love affair with goldman sachs february of '67 and the dow was roughly 850, and lo and behold, 15 years later it was 850. i made my money by finding things mispriced and selling at 600 equivalent to the dow or 700. i wouldn't be surprised if we remained in trading range environment for a couple of years until the global economy delevered and we set a base on more sustainable economic growth. we can as i said before i don't want to repeat the same theme, trillion-dollar plus deficits year in and year out in zero

interest rates are not a sustainable policy and all of us that love our country want to see us get on the right path. i had no problem how we dealt with the fiscal cliff. i think the tax rates on the wealthy ought to have gone up and did go up. we're doing nothing on the expenditure side. you can take all the money the wealthy people have and still not deal with fiscal problems. we need entitlement reform, we need to basically reduce government expenditures. need we have to resort to back taxes because there's not enough to deal with the problems we have. in the world we are in we have to make distinguishing judgments. i'd rather take my chance in equity than i would in a fixed income instrument at the present time. >> let me turn to a judgment that you recently made on apple, the most valuable company in the world, a stock that's probably the most widely owned stock in the world as well. you sold down the position in apple and you say you prefer qualcomm to apple at this point. first off, why did you lose some

faith in apple? >> i didn't lose faith but in nature we pay attention to the market and didn't like the way it was acting, to be honest it was one of the factors. have not been keen on the financial policies. so i think their financial policies are somewhat destructive to valuation, all this cash earning nothing, cisco accelerated dividend, costco i think borrowed a few billion dollars to pay dividend to beat the tax increases. we didn't see anything like that of apple. it's an issue of where they're excessively profitable, they're getting a premium phone from their carriers, the premium could start to diminish i think also there's probably nothing out there that could replace the iphone, and most people have the same form factor now, so that the uniqueness and the specialness of it is probably somewhat diminished but it's a combination of fundamental and technical factors.

qualcomm is more ubiquitous, it's a benefit from the growth of smartphones through any number of manufacturers, not just apple dependent, but apple is a fine company, 11 times earnings we still own it, we are just not as big as we were before. >> mr. cooperman great to talk to you as always. i thank you for your time. >> all the best to you for a happy, healthy and successful new year. >> likewise, thanks so much. leon cooperman omega advisers. steve weiss, first and foremost the qualcomm thing plays right into your wheelhouse. >> qualcomm is as we've talked about is in every single device out there pretty much so you have to go through qualcomm and their licensing if you want to be an apple, if you want to be in samsung, if you want to be in r.i.m., so that's why i like it quite a bit. one thing i would have liked to ask lee what he sees in terms of the downside in bonds, so i think they go to 2.5% to 3%. he's not expecting the retail

investor to come out but pointed institutions sell direct directly into bonds. the reverse. >> back the other way. >> and i think that's the trade of the year and what's going to happen. we talked a little bit before he came on air, lee and i this morning and volatility as he said, not to be undersold. his downside is a little more than the recent lows i believe of 1375, not to put words in his mouth, but you could, you know, where i'm most optimistic actually is we talk about how corporations have really ratcheted down their costs, to me that turns to leverage on the upside, if the economy does go above 2%. >> joe that sounds like it falls with you as well. weiss says it could be the trade of the year, the rotation from bonds into equities. >> sure, i mean you're looking at $35 trillion worth of fixed income holdings so just do the math on a simple allocation of maybe 4% to 5% and that takes you and the s&p well beyond

1500. debris with that and mentioned before being in financials that's a sector most exposed to the increase in yield but overall looking at the marketplace in 2013, i think it's going to be prudent for whether you're an investor or a trader not to make that binary call on the s&p itself. i think there will be sectors that are clearly outperform and sectors that underperform. mr. cooperman liked energy. i don't specifically see energy as a place where you should be allocating at overweight. i that should be underweight. >> baker, where do you come down with some of cooperman's picks, the sectors, materials, energy, health care, those are his 2013 picks. >> he liked housing and the financials, too. lot of the hedge funds got it wrong last year, you've got to be involved and sector specific, very stock pacific like leo was talking about, makes a strong case to be in equities this year. >> dr. j., aig, big performer for a lot of investors including mr. cooperman, apple, sprint,

sal sally mae, what do you see? >> one that jumped out at me the delivering alpha picks, cof, capital one. one of the sectors that benefits the most from the fiscal cliff we just negotiated through was the credit card sector, in particular, those exposed to the middle and to -- well i'll call it the middle class. in other words people that that 50 bucks a month or per paycheck rather would have made an impact, would it have caused them to be late on some bills and so forth, could have very easily. take a look at the outperformance in that one, up better than twice what the market is up. look at visa and mastercard, american express, discover, but this one moving more than the rest of them, i think that's one of his real standout picks in the space. >> let's do the biggest pops and drops. lockheed martin, dr. j., popping 1%. >> that's beneficiary of the cliff, although not as much as

capital one and they've got new contracts here, judge, that's a positive sign. >> joey t., wynn resorts getting a pop. >> expectations were up 17%, wynn gets lifted 16% on this, las vegas sands up 8%. what you do with the names is wait until earnings and play them from the long side. >> how about the news on zip car? >> got acquired for 50% premium, you're happy this morning, avis bought it so it's a good way to kick off the year. >> weiss, kohl's? >> it was downgraded by a firm but you're seeing these department stores selling off, nordstrom's, macy's and kohl's. despite the steal, there's not a lot of spending. >> the drop from the fiscal cliff, not only did congress strike a deal but the term is coming under fire. lake superior state university

has a list of banished words, the most overused phrases of the year, other terms include yolo, trending and boneless wings. >> what about rise above? >> never. >> it was added. it was added to the positive list. >> exactly. still to come the dow's worst performer, can hp make up its losses? the cliff deal is drawing in buyers. we head to the pits to tackle how traders are playing in the oil valley. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses

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back to the news. dividends stocks surge as washington votes to keep tax rates the same for most americans. stuart frankel and steve grasso, happy and healthy one to you. >> same to you, scott. >> dividend tax rates not going up nearly as much as some feared. >> there was a chance it could go up 43.4% basically if you factor in the highest marginal rate of 39.6 plus the 3.8 obama care tax so now that we're 23.8, the top rate, not nearly as much damage. okay to buy them but remember, they're not immune. if we see a sell-off which i

still think we will, they're not immune to that neither. >> the thing is you don't necessarily need to see a sell-off for those to get hit. look at what happened to utilities this past year, right? >> exactly. i think i'm looking for a reversion to the means. i would be looking at xlu, i would be looking at m.o. and the high dividend plays once again. >> you have a couple of favorite names in that space, outside of utilities somewhere else? >> you know, favorite names as far as high yield? >> yeah. >> no, i'm sticking with those. that's the biggest bang for your buck, i would stick with the tobacco names, stick with utilities, dominion specifically has been a good bellwether for me there. i'm playing a lot of those out of favor names, into huelet and yahoo! i want to see them on a pullback again. i like doc, lightened up on a lot of my positions. >> hewlett-packard you're looking for opportunity in?

>> i've already made money in huelet this year, not a lot of people can say that. that autonomy bottom was huge for it. the stock ticked back, it was grossly oversold and when it does that, it has a knack of doubling its stock price. i know it sounds odd but doubling its stock price. it's a turnaround story. i think the worst is over for them, upside is definite there. >> grasso, thank you, catch you next week. weiss, quickly, dividend, stock action your best. >> i can't be very much in bonds but i like at&t and verizon. >> call it a crude awakening even after giving up half of this morning's gains, oil is still up 1% on the deal to avert the cliff, so how much upside is left? let's go to jackie deanglis the host of cnbc.com's "futures now." happy new year. >> that's right, crude hit levels it hasn't seen since september. is oil overreacting or is this a start of a major revision?

would you be long crude? >> about $1 lower i want to get long crude oil. it's not only resolution of the fiscal cliff but you talk china back to manufacturing levels they were before the minnie recession and demand for oil picked up 9% in november, it has gotten a little bit of ahead of itself so i'm looking for a little dip. we'll need another catalyst to get 94 or 95. >> so you'd get long on a pullback. rich you've been bearish on oil. does today's action change your outlook? >> no. grisanti said we're up around 9%, i don't think that's sustainable. if the equity market pulls back you'll see the same thing with crude. i've been selling the rallies, my resistance has been violated, that becomes support so i agree buy that against that support level but we've got big head winds against us here.

93.39 is the 200-day moving average i sold today and i'll stay short and above that a double top at 94.98. i don't see the demand. you can probably play a little bit better with the r bob on the long side or the present which i do own. >> generally sticking with your position there. now you know how our guys are making money off of this move. are you buying crude on this rally? that's our poll question to logon to futuresnow.cnbc.com and vote. it's guaranteed to restore your faith in democracy. scott? >> jackie, thanks so much. joe, you're not buying crude on this rally. if you don't like energy? >> let's combine the two conversations we had on dividends and energy itself, look at conoco phillips, chevron, exxon mobil, large cap mega oil names is the way to go. ahead on "halftime" from a popular retailer to a social media giant, they're making their top three trades today. this area delivered a big gain for investors in to 12.

will banks be a winning bet this year, too. later it's one of the best gainers in the dow today, we'll debate whether hp is finally finding its mojo. more "halftime" is coming back in two. we're half way through the trading day. next we cover the island reversals, the breakouts and breakdowns in "pops and drops," plus they say the dumb money trades in the morning and the smart money trades into the close. so we reveal what that smart money is buying and trading before that final bell tolls when "the halftime report" continues. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars.

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welcome back. let's do our top three trades on the first trading day of 2013. that's our first one, joe, target is down 1.5% today. >> jeffries downgraded from buy to hold, $59 price target september 21st, that's the high end target. it's not going to raise the dividend until 2017. the better play is walmart. >> shares of facebook getting a pop today, jpmorgan increasing its price target, simon, there was also some other positive

chatter on the street about this one. >> basically making strong progress in mobile and mobilization, the whole story is about facebook and they've come out with two new revenue generating products, real time bidding and gifts. >> and tiffany is getting a bump. >> it's more of a global outlook than u.s. outlook. stocks are well down from ties, people play china and asia through tiffanys. >> the top performers in 2012 are the financials, higher today on the fiscal cliff deal and our next guest thinks those gains will continue. fred cannon is kbw's director of research. happy new year, good to have you on the show. >> great to be on, happy new year. >> great. >> year for financials, a lot of people wondering whether it can continue, maybe not to the same levels but what is your outlook? >> a great year, great day, if we could continue these gains all year we'd have a home run.

financials were up 25% this last year. it will be hard to sustain that. as we go into this year we got the big risk on trade last year in financials that really helped in what happened. going forward they have to earn the money to make it work. >> how are they going to do that, yield curve? >> yield curve is not going to help unless we get it steeper. that's the actual key, if the yield curve steepens we'll have a better earnings picture for financials going into the end of this year and next year and that's really the key. if that happens these stocks could move a lot. >> joe terranova, you disagree with that? >> i do believe that the yield curve will steepen and one of the reasons why i'm overweight on the financials, the banks specifically. fred, when you look at a lot of the consumer oriented financial names that have done well the capital ones, the discover financial, even american express you see the momentum continuing in 2013? >> discover has been the one that's been hard to get, you keep thinking the momentum ends and it keeps going up.

i do think that we're going to start to see a rotation out of some of those consumer ones into some of the more commercial banks as we move forward. the reason for that is credit. the shortest duration credit play is credit cards, as we get into the longer duration assets like commercial loans and real estate, we start to see a benefit broaden out into the other banks. >> how do we deal with dodd-frampb, volcker, basel, all of the brewing headwinds that will be flying at us this year? >> i think on the big key this year is going to be volcker on the capitol market side. despite compelling valuations i think goldman and morgan stanley are going to be challenged as we go into this year especially the first half so that's probably an area you want to be cautious of in the first half of the year. >> why citigroup, as one of your top picks? it seems as though certainly the tide in perception has turned about the potential that citi has going forward. >> i think there's a number of things on citi. we have a real catalyst this

year on the stress test from the fed. last year, remember, they got shut down, the stock really underperformed this year, change in management, change in approach, i think they'll do very well on that, and that could be a real catalyst. that is what worked for bank of america last year. >> does moynihan have what it takes to put a double in and do a similar type year in 2013? >> we think that's going to be a tough one because interestingly, b of a was a best performing large cap stock and earning estimates came down significantly. he's got to turn that around as we go forward. we haven't seen it yet, a turnaround in the earning estimates so that's what it's going to take. >> fred, happy new year. we look forward to having you back on "the half" sometime soon. >> great to be on. >> dr. j., what do you see in the financials? >> i love bank of america and wells fargo because of what happened with the fiscal cliff deal that took a lot of uncertainty about the mortgage deduction and so forth off the table, good for b of a and wells fargo in particular and i think

we are going to get that steepening yield curve so i agree with joe terranova and stephen weiss, i think as we get that, that's going to benefit the financials and push it off to the brokers as well. they'll benefit from the steepening yield curve that i anticipate in the second half. >> rising tide, lifting all boats, if big financials are doing well, regional is going to do well? >> i think wells fargo is the best name in there, a third of all american mortgages. we love the housing play, we like the financial sector and clean balance sheet, it's all domestic, no international play, wells fargo. >> credit quality continues to improve. i take the other side, mastercard above 500, transaction plays, stay with that, visa working well, discover if you could grab it on a pullback, do it, american express i like all of them. >> up next shares of hp ringing in the new year with strong gains and we debate whether that company can keep uhm the momentum. we appraised today's jump in

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fallout. and what does the fiscal cliff deal really mean for the money that you make in your investments versus the money that you make in your paycheck? tyler and i will break it down for you coming up at the top of the hour. right now we send it back over to scott on "the fast money halftime report." back over to you. >> thank you, beck, see you at the top of the hour. hewlett-packard the dow's worst performer last year is up big today, it continues to evaluate the idea of selling businesses that no longer meet its objectives. joe is bullish, weiss sees more downside ahead. grasso is making some money in hp. what's the problem? >> the problem is it's a pure commodity stock that has to reformulate their business and i can almost guarantee that earnings revisions are going to be lowered and not higher, so we'll see it bounce because it's so beaten up and well shorted but i think there are better places to make money in tech. i wouldn't short it but i definitely wouldn't be a buyer here. >> what is the bullish case on hp. maybe this break this up. maybe they do that as others

have called them to do. >> number one i am the classic example of what you called a sold out bull when you talk about hp. this time last year i was telling you about the turnaround story trading up at $27. then i. you the it in the penalty box down at 11 bucks. debris i wouldn't short the stock and i think the stock is bottoming and you'll see the institutional flows come back in. it's a fix and rebuild year in 2013, meg whitman said that, 340 to 360 is the eps guidance, way too high. totally agree. the investor sentiment is so totally depressed on that story, fixed rebuild, add one thing. add to fix and rebuild, break up, that will happen at the end of next year. you have relational investors, david whitework, he owns 34.5 million shares. his agreement ends at the end of 2013, not to fight for a breakup. >> if you break it up you're left with two underperforming companies, two old technology companies that should get commodity multiples like steel, you don't have growth. >> but you're left with a

company that is currently priced around 15 bucks that's worth more than that in a breakup closer to probably $20, generating $10 billion. >> here is the potential problem to the bear case, it plays to not wanting to short it. >> right. >> because any bit of good news pops the stock. >> absolutely right. >> free cash flow generation is still strong. >> meg whitman did a good job at ebay but she's not a hardware person. she was on the board for virtually every misstep. why would you say i'm betting on meg whitman? i'm not willing to do that. i'd rather go where companies perform well. qualcomm won't be that much more expensive by the time you downgrade the earnings estimates. >> the gavel is coming down, we're going right to the stock. baker, who made the more compelling argument here on hp? >> i got to jump into bed with joe on that one. i nice 3.7% yield on it, some of the smartest minds on wall street are buying it.

you look at the upside risk looks a lot better. >> just if you're scoring at home you meant ralph wentworth. gold below $1,700 after lawmakers struck that cliff deal, fails to address long-term spending. dennis gartman editor of "the gartman letter" good to see you on "the half." >> good to see you. >> fiscal cliff done, other issues on the way. where is gold going from here? >> it's going higher in yen terms. what you're seeing, we've got a government in japan that is predicating its entire platform on a weaker yen, expects to get a weaker yen, given that you'll try to create, they may not succeed but try to create inflation over there. you want to own gold in yen terms. i know this gets tiring to most people. gold is making a new high in yen terms. in yen terms. gold and dollar terms is well below its highs. it is different in other foreign currencies. i want it own gold but i own it a lot in yen terms.

what is also interesting to me today, look what is happening in the euro. you try to get up through 133. you failed pip think you want it own gold in euro terms too at this point. >> the interesting thing, dennis, gold is going up as risk is in the market today. all of a sudden, if the you know what hits the fan, as we approach this next barring than we have to do over the debt ceiling is gold will stay higher in that case as well. there is a fear trade and people go into gold or no? >> yeah. gold has always been the haven. it's an safe trade. i'm always amused when people say gold is safe. gold is not safe. gold is a very speculative medium. it moves 1 or 2 or 3% in a day. that's an haven. don't think that is a place you can park safe money. if we have another round of problems, with the debt ceiling like we had with the fiscal cliff -- >> why "if"? it's not if, it's when.

>> eats coming, that's obviously the point. >> yeah, dennis, good to talk to you. see you again soon. >> thanks be judge. >> what the trade on gold? >> stay long on gold. whether in yen terms or euro terms, i can't tell that you part, judge. but i do know that i love being short puts in the slv and gld. both work for you. i have neither position. >> gold, silver? >> yeah. right now, silver and gold. same at last year. if you look at where gold and silver was. gold about 10%. silver on the other side in the short term. >> weiss? >> i love chuck e. cheese token terms. >> look, there's a place in every portfolio for it. i just don't know how to handle the trade. >> can you help them out judge? >> it should be invest if gold, don't trade it. >> coming up, in the hot seat, finding out if he is standing by recent trade gone wrong. we'll be right back with the virtual doctor. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

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not so fast, virtual doc. our traders are quick, but not always right. in late november, made a call on family dollar. let's take a listen. >> city and deutsche just pounding the table by the stock calls back in october. now look at it. stock is up better than $12 i think over that same time.

so continues to outperform here like the stock. if we do go off the cliff, this is one of the names, sadly, that benefits. >> wah, wah, wah. >> doc, what now? >> yeah, a horrible call. goldman sachs just last week says they love it down here. i would be willing to double down. again, don't have a position in it but i would buy it at $63 a share. though i like dollar general, dg, a little better in the same space. but i think each are cheaper because of that sell-off. >> all right, let's check in with seema mody to see what she is looking at on fast at five. >> now that we have a deal in place. traders are trying to figure out what the best cliff trade is? financials, insurers, healthcare? we want it tweet you so tweet us our top trade at cnbcfastmoney. get traders to react as well.

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